Kiwi gains ahead of RBNZ statement

THE New Zealand dollar has gained in local trading on expectations the Reserve Bank will hike the official cash rate at this Thursday's policy review, kicking off a prolonged tightening cycle.

The kiwi rose to 84.81 US cents at 5pm in Wellington from 84.64 cents at 8am and 84.61 cents on Monday. The trade-weighted index advanced to 79.50 from 79.19.

Traders have lifted bets on a rate hike on Thursday, pricing in a 101 per cent chance central bank governor Graeme Wheeler will raise the official cash rate, according to the Overnight Index Swap curve.

"The kiwi has certainly outperformed the Aussie, suggesting that it's kiwi-specific," said Imre Speizer, market strategist at Westpac Banking Corp in Auckland.

"It's looking slightly bullish on the day, and as long as we don't get any shenanigans from geopolitics, there's every chance it could take a stab at 85.25 US cents."

The kiwi rose to 93.92 Australian cents at 5pm in Wellington from 93.53 cents on Monday after the National Australia Bank business survey showed firms were gloomier in February after an optimistic January.

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